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Urgent plz.. reply....

vishnu (articles ) (161 Points)

04 December 2012

bill-71310

-discount(trade discount)33310

+packing 2000

=payment 40000

how this transaction should be recorded in tally as trade discount should not be recorded in books

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20 Replies

satish kumar voleti (A.C.A., (ICWAI)) (1686 Points)
Replied 04 December 2012

purchase a/c DR. 38000

Packing A/c DR. 2000

to Sundry Crediotr/ Bank 40000

however you need to reflect the trade discount as the invocie raised will be showing purchase at 71310/-, less trade discount as 33310...

CA CS Chirag (Practicing CA) (834 Points)
Replied 04 December 2012

Trade discount is generally given to the customers on bulk
purchase, repeated, purchases, etc. It's shown in the Sales
Invoice. Seller books the income net of discount and the
buyer books the purchase net of discount. In other words,
there is no need to account this discount separately.

However Cash discount is offered bu the seller to the buyers
on early payment & it's related to credit period. Eg, If
paid with in so many days, 2% discount on the invoice
amount, etc. Both the seller and the buyer need to account
the cash discount as expense or income in their respective
books of accounts.

In modern trading business (particularly retail trading),
discount is a regular feature & here the discount is given
at the time of sale itself, it can be treated as trade
discount and there's no need to book the discount
separately. Discount can be shown only in the MIS report for
the purpose of sales analysis and decision making.

In trade discount we do not less trade amt in sale  
voucher .we entered amount direct amt less trade amount.
Ex.     Garment sale               950
         Total Amt                              950
           50Rs is trade discount.
In Cash discount we less cash discount amt in sale voucher. 
Ex.     Garment sale               1000
        cash Discount                                50
           Total Amt                                    950+
In journal there is no entry of trade discount, But in cash 
discount there is an proper entry of cash discount

vishnu (articles ) (161 Points)
Replied 04 December 2012

Originally posted by : chirag
	Trade discount is generally given to the customers on bulk purchase, repeated, purchases, etc. It's shown in the Sales Invoice. Seller books the income net of discount and the buyer books the purchase net of discount. In other words, there is no need to account this discount separately. However Cash discount is offered bu the seller to the buyers on early payment & it's related to credit period. Eg, If paid with in so many days, 2% discount on the invoice amount, etc. Both the seller and the buyer need to account the cash discount as expense or income in their respective books of accounts. In modern trading business (particularly retail trading), discount is a regular feature & here the discount is given at the time of sale itself, it can be treated as trade discount and there's no need to book the discount separately. Discount can be shown only in the MIS report for the purpose of sales analysis and decision making. In trade discount we do not less trade amt in sale voucher .we entered amount direct amt less trade amount. Ex. Garment sale 950 Total Amt 950 50Rs is trade discount. In Cash discount we less cash discount amt in sale voucher. Ex. Garment sale 1000 cash Discount 50 Total Amt 950+ In journal there is no entry of trade discount, But in cash discount there is an proper entry of cash discount	i understood but what would be the entry in tally for transaction posted above

CA Sourabh Goenka (Chartered Accountant) (249 Points)
Replied 04 December 2012

purchase a/c DR. 38000

Packing A/c DR. 2000

to Sundry Crediotr/ Bank 40000

however you need to reflect the trade discount as the invocie raised will be showing purchase at 71310/-, less trade discount as 33310...

It's Right..

vishnu (articles ) (161 Points)
Replied 04 December 2012

Originally posted by : satish kumar
	purchase a/c DR. 38000 Packing A/c DR. 2000 to Sundry Crediotr/ Bank 40000 however you need to reflect the trade discount as the invocie raised will be showing purchase at 71310/-, less trade discount as 33310...	could you please give me some clarity about relecting trade discount ......

CA Sourabh Goenka (Chartered Accountant) (249 Points)
Replied 04 December 2012

what is mean by "relecting"

vishnu (articles ) (161 Points)
Replied 04 December 2012

however you need to reflect the trade discount as the invocie raised will be showing purchase at 71310/-, less trade discount as 33310...

????? i didn't understood could you explain it

CA Sourabh Goenka (Chartered Accountant) (249 Points)
Replied 04 December 2012

this is mean that the purchase bill should reflect that trade discount is given..

that is purchase value will come first.. then trade discount will be less from that amount and net amount showing in the bill..

2nd you have to mention in the narration that trade discount of Rs......... has been received...

Deepak Bhardwaj (ACS, LLB & CA Finalist) (132 Points)
Replied 04 December 2012

Don't get confuse dear. Trade discount is as simple as this...

You go to a vegetable market and ask the price of a vegetable.. the seller tells you Rs50/Kg..

but then you start bargaining and finally reaches at Rs 40/Kg...... and you buy 1Kg @ Rs40/Kg.

Now you tell me.. how much you paid for puchase? Rs 50 or Rs 40/Kg.. Of course Rs 40/Kg..

Isnt'd?

Therefore take this purchase as Rs 40/Kg only and don't think about what that seller was asking for, therefore it (trade discount) is not at all recorded in books of accounts. But for your convenience you can write it down in narration or wherever you want to .. but that would not have any impact on your books of accounts.

Purcahse A/c - Dr 38000

Packing A/c - Dr 2000

To Creditor A/c - Dr 40000

vishnu (articles ) (161 Points)
Replied 04 December 2012

deepak

it isn't single item it is a collection of various items with its price that is equal to 71310 discount was not given per product it was given as a total so how can purchases(items) be recorded at 38000.......

CA Sourabh Goenka (Chartered Accountant) (249 Points)
Replied 04 December 2012

vihari: simply you see that in bill disoc*nt is showing or not as trade discount... if not then it is a cash disoc*nt and should be treat as this.. otherwise no matter to book the trade discount..